Examining Again Binance’s $3.9 Billion Tether Transfer in the Face of Compliance Charges

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20 Jan 2024

The revelation that the largest cryptocurrency exchange, Binance, and its CEO had recently admitted to accusations of money laundering in the United States was what knocked the market after its recent historic run. This disclosure throws new light on the actions of the corporation, particularly the transfer of a sizable portion of Tether (USDT) only a few weeks prior to coming to an agreement with regulators.
$3.9 billion in Tether were transferred by Binance from Binance-Cold 2, one of its cold wallets, to Binance 3, another wallet on the network. This transaction took place on November 9, and its timing is interesting because it happened so soon after the business agreed to pay a $4.3 billion punishment. Known for retaining a sizable amount of the company’s assets, the Binance-Cold 2 wallet still has over $6.6 billion in it, $4 billion of which is in USDT and other stablecoins including USDD, USDC, and TUSD. The recipient wallet, Binance 3, on the other hand, currently has $3.2 billion in assets, mostly in USDT.
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It’s still unclear why there is such a large fund flow. It is unknown at this time if Binance intends to use these cash to pay out the US government’s penalties or exchange the USDT for US dollars or another fiat currency. Binance had not replied to requests for clarification at the time of reporting.
In the cryptocurrency market, stablecoins — most notably Tether — are essential because they allow traders to conduct transactions without dealing with fiat money like the US dollar directly. The most well-known stablecoin on the market, Tether, is valued at $88 billion, or 6% of the total value of all cryptocurrencies. But its past is clouded by criticism and investigation, particularly from US authorities.
Tether has continuously refuted claims about its financial support and operational transparency, even in the face of prior settlements and continuing investigations.
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Prosecution and Penalties for Breaking American Money-Laundering Laws
Just prior to Binance and its CEO, Changpeng Zhao, agreeing to a combined $1.8 billion criminal penalties and an extra $2.5 billion forfeiture as part of a comprehensive settlement with U.S. authorities, there was a recent $3.9 billion USDT transfer. Zhao left his role as CEO after this settlement. With the adoption of this resolution, U.S. authorities have completed their extensive investigation of Binance’s adherence to legal and anti-money laundering guidelines.
Following these events, Binance saw a massive outflow of user cash totaling close to $3 billion. In less than a day, the exchange lost nearly $1 billion in net customer cash; nonetheless, this is a small portion of its overall balance. The way that the funds are moving is consistent with what has been seen in past market turbulence, such as the collapse of FTX. Though there were early worries about a possible bank run on Binance, things appear to be stable right now. Notably, Zhao has stressed that Binance was not charged by US prosecutors with abusing customer cash or manipulating the market, two things that were crucial to FTX’s demise.
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Not Everything Is Negative: BONK Coin, Binance’s Glow in the Dark
However, not all news is terrible for Binance. The Solana network meme coin BONK has gained attention lately because of its price growth. According to CoinGecko data, BONK had a spectacular week, seeing a value increase of over 25%. This increase in BONK’s value is especially significant in light of the recent changes in the cryptocurrency exchange industry.
BONK’s rise has been greatly aided by Binance. The exchange declared that it will launch 1000BONK, a BONK futures offering, and that PYTH, a DeFi network well-known for its 255 million PYTH token air drop, will have a similar feature. Listing these two popular Solana-based coins is a big step, especially considering Binance’s recent setbacks, which include the loss of its well-known CEO and a huge outflow of more over $1 billion.
Many in the industry now view Binance’s strategic move, spearheaded by its new CEO Richard Teng, as a great move to create market share. The inclusion of BONK and PYTH in Binance’s product lineup may be a precursor to the exchange taking a more prominent place in the market. Declaring its commitment to these new assets, the company said, “Binance Futures will launch the USD⑈-M 1000BONK and PYTH Perpetual Contracts on 2023–11–22 at 14:00 (UTC) and 14:30 (UTC), respectively, offering up to 50x leverage.”
At roughly $197 million and a current trading value of $0.00000459, BONK is currently just outside the top 250 cryptocurrencies by market capitalization, but it has demonstrated considerable promise. The coin experienced a remarkable 1,700% gain to hit its all-time high earlier this week. BONK’s popularity appears to be riding high on the overall revival of the Solana network, which has witnessed a significant increase in the value of its native SOL coin. In contrast to BONK’s more notable gains over the last 30 days, SOL’s 90% increase is insignificant, establishing BONK as a standout performer in the network’s ecology.
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